The EU and the EC: historical introduction and institutions
- The EC is the result of years of evolution of the original three European Communities (EEC),
- established by the Treaty of Rome 1957, which have since been merged into a single European Community (EC).
- Its main objectives are
1. the establishment and
2. regulation of a common European market and monetary union.
- Unlike all other international organisations the EC is recognized as a unique legal entity, having its own institutions and law-making powers and capable of creating rights and duties affecting both the governments of member states and their individual citizens.
- In other words, in the EC’s areas of competence member states have, partly, relinquished their sovereignty.
- Unfortunately, however, the EC Treaty does not contain a clear division between the powers of the EC and those of its member countries.
- Therefore, the EC’s initiatives are guided by the principle of subsidiarity, which states that, in areas of concurrent competence with its member states, the EC acts only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member states acting independently.
- The EU, established by the Treaty of European Union in Maastricht 1992,
- is an `umbrella’ organisation, which includes the EC, but also has wider objectives than the EC,
- allowing member states to work towards adopting a common foreign and security policies and allowing their police and judiciaries to co-operate in criminal matters.
- In such matters member states co-ordinate their policies as sovereign nations, at liberty to co-operate with each other or not.
What are the EU and EC?
- The European Union (EU) came into being with the Treaty on European Union 1992 (TEU).
- The EU includes the EC.
- In turn, the EC is the result of years of evolution of the original European Communities (EEC), which have since been merged into a single European Community (EC).
- The EU has far wider objectives than the EC and, therefore, the EC is now a part of the EU but not the whole. Here, the main focus for study is the EC, the law of which is now deeply embedded in the domestic law of member states.
- The EC (originally EEC), is the creation of the original Treaty of Rome 1957, as amended many times since, and is thus a part of international law.
- Unlike other international organisations, however, the EC has long been recognised as a unique legal entity, having its own institutions and law-making powers and capable of creating rights and duties within the legal systems of the member states. As the European Court of Justice (ECJ) stated in the seminal case Costa v Enel (Case 16/64)  ECR 585:
By creating a Community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from the States to the Community, the Member States have limited their sovereign rights, albeit within limited fields, and have thus created a body of law which binds both their nationals and themselves.
- Therefore, the EC, in its areas of competence, is recognised as a unique law-making body in respect of which member states have partly relinquished their sovereignty.
- In these matters, the regulators are exclusively the institutions of the EC – the Council of Ministers, the European Commission, Parliament and the European Court of Justice (ECJ)In matters that do not fall within the competency of the EC, e.g. the development of common defence, foreign and security policies, and police and judicial co-operation in criminal matters, EU member states retain full sovereignty and are free to co-operate and co-ordinate policies or not.
With effect from May 2004, the EU comprises 25 member states. The original six member states were Germany, France, Belgium, Italy, Luxembourg and the Netherlands. The United Kingdom, Ireland and Denmark joined in 1972. In 1981, the Hellenic Republic (Greece) joined the EC and in 1985 Spain and Portugal were admitted. Finland, Sweden and Austria joined in 1995. In March 1998, the EU formally launched the process that made further enlargement possible. The enlargement of the EU poses a unique challenge, since it is without precedent in terms of scope and diversity: the number of countries, the increase in area (an increase of 34 per cent) and population (an increase of 105 million), and a wealth of different histories and cultures.
How did the EU and EC develop?
- To understand the origins of both the EC and the EU we must look back to 1945 and a Europe devastated by war:
2. politically and
- In the desire to attain some form of harmony as a guarantor of peace and to rebuild Europe, the as peaceful integration was started.
- The movement took several forms. In 1948 the Organisation for Economic Co-operation and Development (OECD) was established with financial aid from the USA in order to restructure the European economies.
- In 1949 the North Atlantic Treaty Organisation (NATO) was formed as a military alliance between the United States, Canada and Western Europe.
- In 1949 the Council of Europe was established, out of which the European Convention on Human Rights (ECHR) was born.
- All these organisations continue to evolve, each pursuing the goal of European stability and peace differently. It is important that you do not confuse them with the EU and the EC. The following are the most significant moments in the history of the EU and EC:
ü In 1950, under the leadership of the French Foreign Minister, Robert Schuman, a plan was devised whereby the raw materials of war, coal and steel, would be placed under the control of a supra-national organisation, and thus the European Coal and Steel Community (ECSC) was established under the Treaty of Paris signed in 1951.
ü Initiatives were also being introduced to provide supra-national regulation of the nonmilitary use of atomic energy.
ü At the same time, the move towards greater economic co-operation and the creation of a European trading area was under way. The result of these developments was the Treaty of Rome, signed in 1957, establishing two additional Communities: The European Economic Community (EEC) – now known as the EC – and the European Atomic Energy Community (EURATOM). The Treaty establishing the ECSC provided for four institutions whose successors are today the heart of the institutional framework of the EC:
o the High Authority, being the executive body serving the interests of the Communities
o the Council, being the executive representing the interests of member states
o the Assembly, a non-elected Parliament
o the Court of Justice.
ü On the introduction of EURATOM and the EEC, separate high authorities and councils were established, all three communities sharing the Assembly and the Court.
- Having thus established three treaties with different organs and differing powers, the next logical step was to merge the institutions. This merger came about in 1965 under the Treaty Establishing a Single Council and Single Commission of the European Communities – the Merger Treaty. The broadly expressed objectives of the EC found expression in Article 2 of the EC Treaty, which provides:
The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing the common policies or activities referred to in Article 3 and 3a, to promote throughout the Community a harmonious and balanced development of economic activities, sustainable and non-inflationary growth respecting the environment, a high degree of convergence of economic performance, a high level of employment and of social protection, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among member states.
The European Parliament and the Court of Justice
- Since the 1960s the European Parliament made repeated requests for its members to be directly elected, but had to be content with delegates from national Parliaments with a dual mandate – Members had to represent both their own national constituencies and the European public in general.
- The Parliament’s calls were finally heeded in 1979 and, since then, Members of the European Parliament (MEPs) have been directly elected. This change carried a significant symbolic value but the powers of the parliament to
- make law and control the executive have been weak.
- The 1970s are seen as a period of stagnation for the EC’s project to bring about further integration.
- An exception was the institution of the European Court of Justice (ECJ), which continued to deliver a series of judgments of great significance – introducing the major doctrines and principles of EC law and furthering the pace of integration.
- Critics believed the ECJ was being too proactive, creating a coherent EC constitution out of the original Treaties.
- Thus the 1970s are seen as a period in which the continuance of European integration was as much, if not more, a legal than a political phenomenon: cases from the time must be studied carefully.
- The political stagnation came to an end in 1986 with the signing of the Single European Act (SEA) which made a series of significant amendments to the original treaties of Rome, including giving new powers to the European Parliament, and set 31 December 1992 as the deadline by which the Community should have established the internal market. As a result, the Community’s legislative activity increased significantly
The Maastricht Treaty
- The next great development was the Treaty on European Union (TEU) – the Maastricht Treaty (February 1992).
- The TEU was to come into force once ratified or approved by individual member states, according to their own constitutional arrangements. Because of difficulties with ratification, it was November 1993 before the Treaty came into force
- The TEU involved the creation of the European Union (EU) – a Union that is larger than the European Community (EC).
- Therefore, the EC is now a part of the EU but not the whole.
- The second part of the TEU governs new areas of activity, namely: common foreign and security policy and police and judicial co-operation in criminal matters.
- The whole edifice is `topped’ by a common roof, the European Union, which is headed by the European Council. Using the new terminology we now have `three pillars’ representing the structure of Europe:
- the first pillar amends the EEC Treaty, making it the EC Treaty
- the second pillar creates mechanisms for inter-governmental co-operation aimed at a common foreign and security policy (remember that in these matters, member states retain their full sovereignty)
- the third pillar meant that the TEU provided for intergovernmental co-operation in the areas of justice and home affairs. This has now been amended and limited to cooperation in criminal matters. Again, this is not within the competency of the EC.
- The second two pillars are fundamentally different from the first.
- The first pillar – EC law – is regulated by
1. the institutions of the Community
2. the Council of Ministers,
3. the European Commission,
4. Parliament and
5. the European Court of Justice (ECJ).
- In relation to the second and third pillars, however, decision-making is quite different.
- In both foreign and security policy and justice and home affairs, decisions are to be reached by way of inter-governmental co-operation. This means that decisions will be reached through agreements to co-operate and co-ordinate policy – agreements that will require ratification or implementation at national level.
- In relation to these matters – in pillars two and three – the European Court of Justice (ECJ) will have no jurisdiction other than where the Council of the European Union decides that it should have.
- We thus have two differing sets of laws:
1. the laws of the European Community (EC) and
2. the law of the European Union (EU),
with the court (ECJ) involved only in relation to the EC – except where the Council of the EU determines otherwise.
- The TEU also expanded the aims and objectives of the EC to include economic and monetary union, environmental issues, consumer protection, civil protection, research and technological development and health protection. Further, it expanded the powers of the European Parliament.
More recent developments
- Development in Europe is ongoing and, before long, changes were made to the pillar structure.
- In 1997, following a series of summit meetings (inter-governmental conferences) the Treaty of Amsterdam was concluded.
- This aimed principally to adjust the EU structure with a view to increasing the membership of the Union.
- On the one hand, it extends the principle of free movement of goods and persons by abolishing border controls within continental Europe (the UK decided to retain its border controls).
- On the other hand, justice and home affairs were significantly truncated, with matters relating to free movement of people – including immigration and asylum – transferred to the EC pillar. Police cooperation and judicial co-operation in criminal justice matters remain in this third pillar.
- From 2005 each state will have one Commissioner. After 2005 a rotation system may be used to keep the number of Commissioners to fewer than 27 as new members join.
- With effect from 2004, the European Parliament has 732 Members. , To avoid an overly large membership, the number of Members of the European Parliament (MEPs) from some states has been reduced.
- The most contentious area for negotiation was the extension of qualified majority voting (QMV) to 39 new areas of decision making.
- QMV means that decisions are taken by majority – agreement instead of unanimity and, therefore, no one member country can block a decision by exercising veto power.
- Unanimous voting, however, has been retained on taxation, social security, most immigration policies and trade in audiovisual products.
- The allocation of votes has also been altered. Some smaller states lost voting power, others maintained their status quo, while Britain, France, Germany, Italy, Spain and the Netherlands secured increased voting power.
- The realignment of voting power means that any three of the largest states in combination will be able to block decisions.
- These changes will result in greater flexibility, allowing member states to opt out of certain areas and to opt back in later.
Are the powers of the EC clearly defined?
- Unfortunately, an express division between the powers of the EC and of its member states does not exist in the EC Treaty, in the manner that one finds in federal contexts, e.g. in the US Constitution.
- Essentially, the EC is limited by the principle that its actions must have a legal basis (either in the Treaty or in secondary legislation), which must be clearly stated in the Preamble to any EC legislation- see Articles 5(1), 7, 5(2) and 5(3) of the EC Treaty.
- Any EC action that does not have a clear legal basis may be annulled for lack of competence – see Article 230 EC.
- Therefore, the EC has no general law-making competence, in the sense that national legislatures have.
- In general terms, the EC’s objectives are (see also Article 2 EC):
o to create and maintain the internal market
o to create and maintain a common commercial policy to non-EC countries
o to preserve competition
o to create and maintain an economic and monetary union
o to work in parallel with national governments in such fields as
Ø social policy,
Ø vocational training,
Ø public health,
Ø consumer protection,
Ø trans-European networks,
Ø research and development,
Ø environment and development co-operation,
Ø establishing and strengthening regional co-operation across member states, and
Ø some aspects of visas, asylum and immigration.
As a result of the lack of a comprehensive and clear division of powers, few powers are exclusive to the EC. Thus, in the majority of cases, the EC acts in fields where national governments also retain competence. Where EC legislation already exists, member states can also regulate provided that they do not undermine the common EC policy. But what about those cases where new EC legislation is proposed? For such cases there are the two important principles of subsidiarity and proportionality.
The principle of subsidiarity
- Under any federal structure, powers can either be exclusive or concurrent.
- As found in Article 5 EC, the subsidiarity principle permits all EU institutions to act in areas of concurrent competence with member states
`only if and insofar as the objectives of the proposed action-,cannot be sufficiently achieved by the Member States.’
This is a fundamental concept in federal states and the approach to subsidiarity taken in the EC has been compared to the one taken in Germany between the national government and the various federal Lander.
The principle o f proportionality
Roughly defined, this requires a reasonable relationship between an EC objective and the particular legislative or administrative means used to attain that objective.
The institutions of the EC and the issue of democracy
- Although the EC’s government includes legislative, executive and judicial institutions, there is no separation of powers.
- This contributes to what critics call a’ democratic deficit’ within the EC.
- Thus the Council of Ministers – which comprises Ministers from member states – is always involved in legislation, occasionally making laws without the need for Parliament’s approval.
- The European Commission acts as an executive but also has a great deal of power to propose legislation and, also, some quasi judicial powers.
- The European Parliament was originally an unelected assembly designed to have only consultative and supervisory, rather than law-making powers.
- Since 1979, however, the MEPs have been directly elected and its powers have been extended on many occasions.
- Today, its role in the process of creating EC law varies from co-decision powers alongside the Council of Ministers in about 63 per cent of all EC policy areas – including approval of the EC’s annual budget – to mere consultation, according to the subject matter of the proposed law.
- Clearly, enhanced democracy within the EC involves expanding the law-making and executive-checking capacities of the Parliament.
The European Council
Ø Main function at a glance: informal leadership.
- The year 1974 saw the formalization of an informal arrangement that had pertained from the 1960s, whereby the heads of government of the member states and their foreign ministers meet twice a year to formulate major policy decisions.
- The European Council heads the EU and, informally, the EC. Although the Single European Act 1986 and the Treaty on European Union 1992 both recognised it, the Council does not have the status of a EC institution (the EC institutions are set out in Article 7 EC).
- Therefore, its decisions are political rather than legal.
- Moreover, it functions without rules of procedure, published agenda or principles of decision-making. Its operations, therefore, are not transparent.
- Nevertheless, because of its symbolic importance, the European Council has become de facto the highest decision-maker in the EU, though without a legal foundation for this role. This situation makes the EU appear non-democratic.
- In the relevant literature, critics of this and other non-democratic aspects of EU/EC governance refer to the organisations’ democratic deficit.
The Council of Ministers
Ø Main functions at a glance: legislative and higher executive.
- Within the EC, the Council of Ministers represents the executive and therefore authorises the Commission to implement EC legislation – article 202 of the EC Treaty. Also by virtue of article 202, its main function is to take decisions, i.e. to legislate – these days usually acting alongside the European Parliament.
- This fusion of executive and legislative powers, which is contrary to the liberal democratic principle of `separation of powers’, contributes to the EC’s perceived democratic deficit.
- This is all the more alarming due to the fact that its members, who are Ministers in national governments, are either unelected or elected to national office, i.e. they are elected on a national rather than a European agenda. Moreover, what goes on in the meetings of the Council of Ministers, i.e. how it reaches its decisions, is secret – another worrying instance of lack of transparency within the EC.
- The Council of Ministers has no fixed membership and its composition varies depending on the subject matter under discussion. For example, when the subject on the agenda is agriculture, the Council will consist of the ministers of agriculture from all member states, and when the subject is transport, the membership will be made up of the respective ministers of transport.
- Moreover, in reality, the members of the Council of Ministers tend to defend the interests of their national states. Thus, the EC’s main political and legislative institution is fragmented along both policy sectors and national interests.
- Central to Community development is the voting system used in the Council of Ministers, the details of which are set out in Barnett, Chapter 8, pp. 220-222. The Presidency of the Council of Ministers rotates among member states on a six-month basis.
- Note that, because the Council of Ministers has a fluctuating membership and is not permanently in session, the Committee of Permanent Representatives (COREPER) acts as the permanent body engaged in Council work.
The European Commission
Ø Main functions at a glance: legislative initiation, lower executive and quasi judicial.
- The Commission is centrally concerned with all aspects of Community decision-making: it lies at the very heart of the Community.
- Originally called the High Authority, the Commission has been described as the `civil service’ of the EC.
- Despite the fact that it is assisted by a great number of Brussels-based civil servants, it is inaccurate to think of the Commission as mere bureaucracy, because the Commission has a great deal of power to initiate, i.e. to propose legislation, and also some quasi judicial powers.
- For example, it can penalise member states which disobey certain parts of EC law, or investigate European companies that break EC competition rules.
- The fact that the power to initiate legislation lies with the unelected Commission, rather than with Members of the Parliament, is considered by many as further evidence of the EC’s democratic deficit
- Articles 211-219 (formerly Articles 155-163) of the Treaty of Rome (the EC Treaty) established the powers of the Commission. In essence, these are to make legislative proposals and to ensure that Community law is applied within the Community.
- The Commission currently consists of 20 members, appointed by the governments of member states in consultation with one another. Commissioners must be nationals of one of the member states and no more than two may be nationals of the same member state. The five largest member states (Germany, France, Italy, Spain and the United Kingdom) each have two Commissioners; other member states have one. Commissioners are appointed for a renewable four-year term of office and cannot be dismissed during their term of office by governments.
- Once appointed, Commissioners must act entirely independently of the governments that appoint them: they are not representatives of the governments of member states. A President, appointed from among the Commission in common agreement with member states, heads the Commission. This office is held for a renewable two-year term.
- The European Parliament has the power to pass a motion of censure to remove the Commission en bloc and the ECJ can require the retirement of a Commissioner on the grounds of serious misconduct or failure to fulfil his or her duties. The Parliament came near to dismissing the Commission in 1999 – in the event the Commissioners resigned without a vote of censure from the Parliament, following a highly critical parliamentary report into the Commission’s activities.
The European Parliament
Ø Main functions at a glance: legislative, consultative to the Executive.
- First known as the Assembly, the European Parliament (based in Strasbourg, France) was originally designed to have only consultative and supervisory rather than law-making powers.
- The powers of the European Parliament were extended by the Single European Act 1986, and further by the Treaty of Union 1992, the Maastricht Treaty.
- Most importantly, the Treaty on European Union, 1992, extended the Parliament’s involvement in the legislative process by introducing the co-decision procedure whereby, in certain policy areas, Parliament and the Council of Ministers must jointly approve new legislation.
- Therefore, the Parliament’s role in the process of creating EC law, alongside the Council of Ministers, depends on the subject matter of the proposed law. Here are two important points to remember:
Ø Regarding legislative powers, the proportion of policy areas in which the Parliament is not involved, i.e. where the Council of Ministers decides alone, has declined from 72% of the original EEC Treaty to 37% of the Treaty as amended in Nice, 2000. Nevertheless, this 37% includes significant areas such as the Common Commercial Policy, in which the Parliament has not even got formal consultation rights. In the area of agriculture the Parliament enjoys only consultative status. The approval of the annual EU budget, however, requires the co-decision of Parliament and the Council of Ministers. Finally, the Parliament does not have the right to initiate legislation, which is still the reserve of the Commission. It can only request legislative initiatives from the Commission.
Ø Regarding the scrutiny of the EC’s executive the Parliament, as noted earlier, exercises significant scrutiny over the Commission, including the power to refuse to approve the appointment of the new Commission.
Members of the European Parliament (MEPs) sit in political groups and not national delegations. MEPs have been elected directly since 1979, and under a system of proportional representation since 1999. Clearly, enhanced democracy within the EC involves expanding the law-making and executive-checking capacities of the Parliament. Nevertheless, many European voters are not interested in the Parliament’s activities and the electoral turnout is consistently low in some member states. This further accentuates the problem of democratic deficit within the EC.
The EC Courts
Ø Main function at a glance: judiciary.
- The EC judiciary consists of two courts, both of which are based in Luxembourg: the Court of First Instance (CFI) and the European Court of Justice (ECJ).
- The 15 judges of each court are appointed by `common accord of the governments of member states’ and are `chosen from persons whose independence is beyond doubt’. The Courts are presided over by a President who holds office for a three-year term.
- Assisting the judges are six Advocates-General, whose role is to present the judges with their opinions, which are non-binding.
- The CFI acts as the EC’s administrative court for the less controversial issues.
- The ECJ’s role is provided for, in the most general terms, by Article 220 (formerly Article 164) of the EEC Treaty:
The Court of Justice shall ensure that in the interpretation and application of this Treaty, the law is observed.
- It is the need for uniformity of the law within the legal systems of member states which represents a major function of the court.
- The ECJ is the highest court within the Community and its decisions are final. The circumstances under which the ECJ will review its own decisions are limited.
- Many decisions of the ECJ concern matters of major importance for the EC and must be studied carefully.
Powers of the ECJ
Here are the ECJ’s four crucial powers:
Ø It hears appeals against decisions from the CFI (article 225 EC). Under Article 230 of the EC Treaty (formerly Article 173) the ECJ has jurisdiction to rule on the legality of acts of the institutions of the Community. Article 230 is thus of fundamental importance to the manner in which the various institutions are kept within their legal powers. Article 232 of the EC Treaty (formerly Article 175) provides the means whereby member states and institutions of the Community can challenge the Council and Commission on the basis that they have failed to act as required under the Treaty.
Ø Under Article 226 of the EC Treaty (formerly Article 169), the ECJ may rule on matters brought before it by the Commission alleging breach of the treaties by a member state. Prior to bringing the matter to the ECJ the Commission exercises a quasi judicial function. The Commission must first consider that a member state has failed to fulfill a Treaty obligation and, secondly, give a reasoned opinion to that state and advise as to the action which must be taken – and the time frame for action – to comply with the opinion. Only if a member state fails to comply with the opinion will the matter be taken to the ECJ. See for example Commission v Italy  1 CMLR 206 and Commission v UK  2 CMLR 45.
Ø Under Article 227 of the EC Treaty (formerly Article 170) one member state may bring a fellow member state before the Court. Article 228 of the EC Treaty (formerly Article 171) provides that, when the ECJ finds that a member state has failed to fulfill its obligations that state shall bg required to take the necessary measures to comply with the judgment of the Court.
Ø Under Article 234 of the EC Treaty (formerly Article 177), the ECJ hears `preliminary references’ from the EC’s member states’ national courts. This means that when a judge in national law proceedings is confronted with an ambiguity regarding EC law that she or he is unable to resolve, he or she is able to ask the ECJ for an authoritative ruling. This is the single most important jurisdiction in terms of the harmonization of laws within the EC. Because the Court may rule authoritatively on the interpretation of the Treaty and other elements of EC law, Article 234 raises directly the nature of the legal system of the Community and the relationship between EC law, the ECJ and domestic law and the role of judges in national courts. Article 234 is, therefore, crucial to the development of EC law.
Article 234 (formerly Article 177)
- Article 234 represents a vital means by which the harmony of laws between member states is achieved.
- It is not difficult to see that achieving uniformity is difficult as 15 nation states adopt and adapt to the requirements of Community law.
- For optimum effectiveness, a balance needs to be struck between making references to the ECJ where necessary, and the domestic courts being able to apply Community law without undue delay or cost. Article 234 establishes a partnership between the judges within the national legal systems and the ECJ.
- The ideal is that national judges should not be dictated the `meaning’ of EC law by the ECJ when they consider the matter sufficiently clear. Looking at how English judges see this partnership, in Bulmer v Bollinger  Ch 745 the English Court of Appeal considered the question of when references to the ECJ should be made, and Lord Denning laid down guidelines for English courts to apply when a reference was a matter of discretion. The European Court has itself considered the circumstances under which courts should refer and laid down the doctrine of acte clair in the case of CILFIT  1 CMLR 472.
- The court emphasized that the general purpose of Article 177 (as it then was) was to ensure the proper application and uniform interpretation of Community law in all member states and to prevent divergence occurring within member states. The House of Lords had adopted a similar approach in Henn and Darby v Director of Public Prosecutions  AC 580. The House of Lords warnedthat lower courts should be slow to assume that a matter of EC law -was sufficiently `clear’ and, need not be referred to the ECJ. Finally, once the ECJ accepts jurisdiction and gives a ruling, the matter is then returned to the domestic court for application – thus preserving the partnership ideal. Therefore, it is essential not to mistake the ECJ for a kind of Appeal Court from the national courts.
- The next important point to consider is that the ECJ, in the process of giving preliminary rulings, has adopted a series of extremely important principles that some people think should have been the product of political, rather than legal, reasoning. For example, the legal nature of the entire EC as a’ unique entity, which creates law applicable to member states and their citizens’ has been defined within preliminary rulings (Van Gend en Loos  CMLR 105, Costa v ENEL  CMLR 425). The same goes for the principle that EC law has supremacy over conflicting national law of member states and that it must be uniformly applied within member states (Internationale HandeLsgesellschaft  CMLR 255, [197412 CMLR 540, Simmenthal  ECR 629). These and other cases are discussed in Chapter 14 of this Guide. Remember, therefore, that the ECJ’s preliminary rulings are often of constitutional significance for the development of the EC law.
- In terms of its methods of interpretation, the ECJ follows continental European legal systems in adopting a teleological approach (from the Greek telos or `objective’). This means that, whenever it is confronted by ambiguity or gaps in the Treaties or in secondary sources of EC law, the Court will choose the interpretation that appears to further the ultimate aims of the EC, even if these are only generally mentioned in the EC Treaty. To understand the enormous importance of the Court’s method consider, for a classic example, the seminal case 26/2 NV Algemene Transporten Fxpeditie Onderneming van Gend en Loos v Nederlandse Administratie der Beslastingen  ECR 1. In that case the Court found little in the relevant Treaty Article 25 to back its view that the EC Treaty conferred enforceable rights on the individual citizens of its member states. To support this position the Court looked, instead, at the Preamble to the Treaty which `refers not only to governments but also to the peoples’ of Europe.
- Although the ECJ is not a supreme federal court, once a national court has sought a ruling it is expected to adopt the ECJ’s interpretation. The implication for the UK is that UK judges are, through preliminary rulings, adopting judgments that do not follow a method of literal interpretation. In this way, UK judges are diverting from their usual method of literal interpretations and, instead, become more creative. From the UK constitutional perspective, this poses a further challenge to the sovereignty of the UK parliament.
The Court of Auditors
Ø Main function at a glance: Auditing.
- The Court of Auditors, established in 1975, following amendments made by the Treaty on European Union in 1992, became the fifth EC institution. Its main task is to audit the accounts and the implementation of the EC budget. Its members are appointed by the Council of Ministers but it is independent of the other EC institutions.
The European Central Bank (ECB)
Ø Main functions at a glance: economic and monetary policy.
- Since the start of 1999 much of the EU, the so-called `Euro zone’, has had a common monetary policy and a single currency, the euro (the member countries that have not at the time of writing adopted the euro are the UK, Sweden and Denmark). Article 107(1) sets out the legal basis of the ECB. The ECB defines and implements the monetary policy of the Euro zone.